The following situation involves a possible violation of the AICPA\'s code of pr
ID: 2551879 • Letter: T
Question
The following situation involves a possible violation of the AICPA's code of professional conduct. For this situation, (1) determine the applicable rule number from the code, (2) decide whether or not the code has been violated, and (3) briefly explain how the situation violates (or does not violate) the code. Your answer should be set up something like this: Rule # _____ Violation? Yes or No.
Provide a one- or two-line explanation.
Sarah Marin, CPA, is a senior auditor in the San Francisco office of Coopers & Snoopers, CPAs. Sarah's father is employed as the controller of Line Electronics, a large publicly held company in Michigan. Line Electronics is one of Coopers & Snoopers audit clients. Neither Sarah nor the San Francisco office of Coopers & Snoopers is involved in the audit of Line Electronics.
Explanation / Answer
(1) AICPA Rule of Conduct Rule No: 101 Independence.
(2) No violation of the independence rule.
(3) The situation does not violate the code. While Sarah's father occupies a key position wih an audit client of the firm, there is no independence violation as long as Sarah is not a member of the engagement team. The firm may provide the audit services.